BPCL: Government’s stake sale may be delayed

Privatisation of India’s second-largest oil refiner BPCL may have been pushed back to the next financial year as no bidder visited the company’s premises in the last quarter, a senior company official said on Wednesday.

The government is selling its entire 52.98% stake in BPCL for which three expressions of interest, including one from Anil Agarwal-led Vedanta Group, have been received.

Financial bids are yet to be called.

On a call with analysts, BPCL’s Director-Finance V.R.K. Gupta said the company continues to update data for bidders and is replying to their queries.

During the third quarter (October-December 2021) “no major events happened in terms of bidder visits to our company premises and the status quo is same”,he said.

“We don’t have any significant role in the disinvestment process,” he said. “Whatever due diligence, data requirements are there, every quarter we update the data requirements in the portal, and bidders are continuously accessing the data.” BPCL, he said, is updating information on the data room and replying to queries raised by the bidders.

“We are continuously updating, and we are getting some queries and we are replying, that process is on,” he added.

His statement on no bidder visiting the company premises implied that either the three bidders have completed the physical due diligence or that they have taken a pause for now.

BPCL had in April 2021 opened a virtual data room, mostly containing financial information on the company, and qualified bidders signing confidentiality undertaking (CU) had been given access.

Bidders, which besides Vedanta include private equity firms Apollo Global and I Squared Capital’s arm Think Gas, were thereafter allowed physical inspection of assets such as refineries and depots as part of the due diligence process.

The government was to seek financial bids once bidders completed due diligence and the terms and conditions of the share purchase agreement (SPA) were negotiated.

Sources said certain data which is commercially sensitive is uploaded in a separate section of the data room referred to as ‘Clean Data Room’ and access extended only to the designated team of lawyers of the qualified bidders in the interest of confidentiality and prevention of misuse of data.

Gupta said the government has indicated that privatisation might not happen before March, and may even get pushed to the next financial year.

“Yesterday (in the Budget) also they have indicated that it might not happen before March 2022, it may be pushed to the next financial year,” he said.

BPCL privatisation needs to achieve certain milestones before financial bids are called. A floor price for the bidding needs to be set and a sale-purchase agreement needs to be finalised.

“There are some milestones that have to achieve before calling for the financial bids. That entire process is being carried out by DIPAM only. From our side, whatever data we have to provide on a quarterly basis we have to provide the data and we have to reply to the query,” he added.

A special purpose vehicle floated by the BSE-listed Vedanta Ltd and its London-based parent Vedanta Resources Plc submitted an EoI for buying the government stake in BPCL before the close of the deadline on November 16, 2020.

While I Squared Capital is a private equity firm focusing on global infrastructure investments, New York-based Apollo Global Management, Inc is a global alternative investment manager firm.

I Squared Capital invests in energy, utilities, transport and telecom projects in North America, Europe and select high growth economies such as India and China.

BPCL will give the buyer ownership of around 15.33% of India’s oil refining capacity and 22% of the fuel marketing share.

The buyer of the company will get 35.3 million tonnes of refining capacity — 12 million tonne Mumbai unit, 15.5 million tonne Kochi refinery and 7.8 million tonne Bina unit.

BPCL also owns over 19,000 petrol pumps, 6,166 LPG distributor agencies and 61 out of the 260 aviation fuel stations in the country.

The firm also has upstream presence with 26 assets in nine countries such as Russia, Brazil, Mozambique, the UAE, Indonesia, Australia, East Timor, Israel and India. It is also making a foray into city gas distribution and has licences for 37 geographical areas (GAs).